Question

You are the manager of a small pharmaceutical company that received a patent on a new...

You are the manager of a small pharmaceutical company that received a patent on a new drug three years ago. Despite strong sales ($225 million last year) and a low marginal cost of producing the product ($0.70 per pill), your company has yet to show a profit from selling the drug. This is, in part, due to the fact that the company spent $1.3 billion developing the drug and obtaining FDA approval. An economist has estimated that, at the current price of $1.10 per pill, the own price elasticity of demand for the drug is -1.5.

Based on this information, what can you do to boost profits?

A: Keep price the same.
B: Raise price.
C: Reduce price.
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You are the manager of a small pharmaceutical company that received a patent on a new...
You are the manager of a small pharmaceutical company that received a patent on a new drug three years ago. Despite strong sales ($150 million last year) and a low marginal cost of producing the product ($0.55 per pill), your company has yet to show a profit from selling the drug. This is, in part, due to the fact that the company spent $1.6 billion developing the drug and obtaining FDA approval. An economist has estimated that, at the current...
You are the manager of a small pharmaceutical company that received a patent on a new...
You are the manager of a small pharmaceutical company that received a patent on a new drug three years ago. Despite strong sales ($150 million last year) and a low marginal cost of producing the product ($0.50 per pill), your company has yet to show a profit from selling the drug. This is, in part, due to the fact that the company spent $1.7 billion developing the drug and obtaining FDA approval. An economist has estimated that, at the current...
You work for a pharmaceutical company that has developed a new drug. The patent on the...
You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the​ drug's profits will be $ 5 million in its first year and that this amount will grow at a rate of 5 % per year for the next 17 years. Once the patent​ expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is...
You work for a pharmaceutical company that has developed a new drug. The patent on the...
You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 1717 years. You expect that the​ drug's profits will be $ 4$4 million in its first year and that this amount will grow at a rate of 5 %5% per year for the next 1717 years. Once the patent​ expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is...
2) You work for a pharmaceutical company that has developed a new drug. The patent on...
2) You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the​ drug's profits will be $4 million in its first year and that this amount will grow at a rate of 6% per year for the next 17 years. Once the patent​ expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the...
XYZ Pharmaceutical, Inc. just got FDA approval for their new drug, Viagrina. The company has never...
XYZ Pharmaceutical, Inc. just got FDA approval for their new drug, Viagrina. The company has never paid a dividend, but they expect to pay one for the first time by the end of the year. The expected dividend is $3.00 per share and the company expects that dividend to increase at a rate of 20% for five years. After that, XYZ expects to see its dividend growth limited by the growth rate the US economy, which on average is 4.5%...
34)EZJOINT. After spending 10 years and S1.5 billion, you have finally gotten Food and Drug Administration...
34)EZJOINT. After spending 10 years and S1.5 billion, you have finally gotten Food and Drug Administration (FDA) approval to sell your new patented wonder drug, which reduces the aches and pains associated with aging joints. You will market this drug under the brand name of EZjoint Market research indicates that the demand elasticity for EZjoint is-1.25 (at all points on the demand curve). You estimate the marginal cost of manufacturing and selling one more dose of EZjoint is S1. (a)...
Pfizer was established in 1849 in Brooklyn, New York by cousins Charles Pfizer and Charles Erhart...
Pfizer was established in 1849 in Brooklyn, New York by cousins Charles Pfizer and Charles Erhart with a loan of $2,500 from Pfizer’s father.2 Today, 167 years later, Pfizer Inc. has international revenues of $49 billion, which makes it the second-largest pharmaceutical manufacturer in the world.3 Despite Pfizer’s success, the company has faced many challenges over the last few decades. The pharmaceutical industry is heavily influenced by legal, political, and technological forces, and all indications are that the industry will...
Shine-Ola Premium Bulbs: the Pricing Decision Voll Taik, the marketing manager for a new lighting start-up...
Shine-Ola Premium Bulbs: the Pricing Decision Voll Taik, the marketing manager for a new lighting start-up was very interested in the concept of Value-Based pricing. He was wondering how he might apply the concept to a situation facing his company "Shine-Ola". The new product, "Shine-Ola Premium Bulb", was a LED (Light Emitting Diode) technology and was dramatically better than competing lighting solutions available on the market. Competing solutions included standard incandescent bulbs and compact fluorescent lighting, (CFL). Extensive laboratory testing...
1) Which of the following is NOT a value-creating activity associated with the differentiation strategy? a....
1) Which of the following is NOT a value-creating activity associated with the differentiation strategy? a. intensive training programs to improve employee efficiency b. strong capability in new product development. c. rapid and timely deliveries to customers. d. procurement systems focused on finding the highest quality raw materials. 2) A certain marble quarry provides a unique type of marble that is richly colored and strikingly veined. It has been used for churches and public buildings throughout the world. The architect...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT